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Bulletin December 2016

Selected news and information on European Energy Development Cooperation

No. 7 | December 2016

Dear EUEI Members, dear Readers,

Getting into the spirit of Christmas giving, December’s EUEI Bulletin is a bumper edition, offering a wealth of information and resources on energy and development cooperation. From progress and events at COP22, to Council conclusions on energy and development, three Commission communications and a raft of relevant reports, we hope this final edition for 2016 offers you interesting reading.

Importantly, in this edition we would also like to announce and invite you to the European Commission’s forthcoming Stakeholder Consultation on Women and Sustainable Energy, taking place in Brussels on 7-8 December. The consultation will help shape a forthcoming call under the Gender Window of ElectriFI. The aim is to build partnerships for supporting an enhanced and active role of women in the sustainable energy sector. Those interested in attending are asked to please register – and all are invited to spread the word through relevant networks.

The EUEI Bulletin will be back in the New Year, with more insights and information on energy development cooperation – and we hope you will be too, with news of your projects and activities for us to publish! We look forward to hearing from you and to working together in 2017 – and wish you a productive and peaceful December till then.

Marrakech and beyond - Global efforts to make the Paris agreement a reality

During the COP22 conference, taking place in Morocco from the 7th to the 18th of November, numerous initiatives were launched – all with the aim to deliver at the landmark Paris Agreement on climate change and the related Sustainable Development Goals. One of them is the new global “NDC Partnership”. Chaired by conference host Morocco and by Germany, it helps countries to achieve their National Climate Plans (known as Nationally Determined Contributions, NDC’s), by providing financial and technical assistance as well as an online database. The partnership also wants to encourage South-South cooperation and engage more of the private sector. The latter is also at the heart of the Climate Business Innovation Network, launched by the World Bank and partners in Marrakech. Further, the EU announced support for Mozambique and Zambia in developing the renewable energy sector in both countries.

Attending COP22, the EU’s Commissioner for International Cooperation and Development, Neven Mimicia, participated in the Africa Renewable Energy Initiative (AREI) side-event and opened the meeting of the Covenant of Mayors in sub-Saharan Africa – leading the way for local governments to address the triple challenge of energy access, climate mitigation and adaptation, and developing a network of city-to-city cooperation. “We need to transform the commitments of the Paris Accord and increase access to energy in a context of lower carbon emissions” Mimica stated at these occasions.

The Africa Day was also one of the highlights of COP22, with Germany announcing their commitment of €3 billion to 2020 for implementing AREI – in addition to the €4.3 billion invested in 2016. Sweden will spend €1 billion on AREI and other initiatives.

Beyond Africa, the EU also aims for new climate change collaboration with Latin America, as highlighted at the EUROCLIMA side event during COP22. The new EUROCLIMA+ regional programme, adopted in 2016, focuses on strengthening climate change resilience and sustainable environments for the most vulnerable populations in Latin America.

How to mobilise and get access to climate change finance for adaption was another big issue at the climate conference in Marrakech. Aside event organised by the Global Climate Change Alliance (GCCA+)identified solutions that can be realistically implemented by stakeholders on the ground and which correspond to the needs of societies. Furthermore, Germany announced in Marrakech its support to developing countries in building up climate change resilience insurance.

Altogether, participants at COP22 showed their willingness to step up efforts in the battle against climate change, despite the breaking news of Donald Trump being elected the new US President. “Trump’s election must not serve as an excuse for inaction”, non-governmental organisations (NGOs) like Friends of the Earth International (FOEI) demanded. “The US has been outside the UN climate process before and other countries must ensure that good progress continues to be made”, FOEI said in a press release.

As for the COP22 outcomes, experts and NGOS stated that progress has been made but called for placing 2018 firmly on the map as the moment for countries to come up with concrete plans towards green growth and adaptation finance, and making plans for ongoing funding after 2025. A collection of reactions to COP22 outcomes is provided by the Climate Action Network (CAN). The next major negotiations on climate change will take place in Bonn, Germany, next year.

EU Communications: On the way to a sustainable future and a paradigm-shift in European development policy

The EU will implement the 2030 Agenda and the Sustainable Development Goals in line with the principle of subsidiarity and in two streams. One is to mainstream the SDGs into current EU policy frameworks and priorities. The second stream is to further develop long-term visions and sectoral policies after 2020. This is the key message of the EU’s communication “Next steps for a sustainable European future”, launched by Vice President of the Commission, Frans Timmermanns on the 22nd of November. Furthermore, the ten priorities of the Commission of President Juncker, among them the transition to a circular economy, the energy union, quality education, training and the Youth Guarantee, sustainable finance and the European Pillar of Social Rights, are entwined with the SDGs. Integrating the two approaches, “avoids that implementation of the SDGs takes place in a political vacuum”, the communication states. A strong emphasis lies on impact assessment and monitoring progress towards the SDGs. As for financing, the communication points to the EU Budget Focused on Results (BFOR) initiative, aiming to ensure that every Euro of European tax payers' money spent contributes as much as possible to an improved future.

In line with this is the EU’s Communication on a new European Consensus on Development. It reflects a paradigm shift in development cooperation and proposes a framework for action for all EU Institutions and Member States, with particular emphasis on cross-cutting drivers of development, such as gender equality, youth, sustainable energy and climate action, investment, migration and mobility. The new European Consensus on Development will also be subject to an open public consultation. Important questions like how the poor can better benefit from EU development cooperation and how EU policies can tackle climate change and green energy were already addressed at a conference on ”The future of EU development policy” in Paris, in October. Results and videos can be found here.

The full communication “Next steps for a sustainable European Future” can be found here.

For the communication on the revised European Consensus on Development, please follow this link, and a draft report for the EU Parliament’s Committee on Development is also available.

European Council adopts conclusions on energy and development

Under the Slovakian Presidency of the European Council, ministers attended the Foreign Affairs Council (Development) on Monday the 28th of November. Meeting in Brussels, they discussed the revision of the European consensus on development, and its contribution to implementing the 2030 Agenda for sustainable development, and held an exchange of views on future relations between the EU and the ACP countries. At the meeting ministers also adopted the Council Conclusions on Energy and Development. These outline the priorities for European efforts in development cooperation and in European energy and climate diplomacy. The conclusions underline European commitment to and importance of a number of existing policies and initiatives, including to the “EU Energy Initiative as a forum for exchange amongst the EU and its Member States in order to promote the coherence of the European energy development cooperation.”

The EU has reaffirmed its commitment to support Africa in its fight against climate change and has promised to facilitate investments to increase the continent’s renewable electricity generation capacity by at least 5 GW. This is half of the 10 GW goal set by the Africa Renewable Energy Initiative for 2020. In a joint press statement together with Alpha Condé, President of Guinea and African Union Coordinator for the AREI, EU Commissioner for International Cooperation and Development, Neven Mimica, also stated that these goals can only be reached if both the European and African private sectors engage in investment opportunities, industrial cooperation, local manufacturing and transfer of technologies, while avoiding negative environmental impacts and ensuring an efficient use of resources. Furthermore, modern financial instruments and mechanisms such as the Africa Investment Facility (AfIF), the Electrification Financing Initiative (ElectriFI) and opportunities provided by the EU External Investment Plan should be used to leverage sustainable energy investments.

€17.6 billion of climate financing for developing countries came from Europe in 2015

The EU, the European Investment Bank, EIB, and Member States last year provided €17.6 billion to help developing countries tackle climate change. The EU’s contribution forms part of the goal, set by developed countries, to provide US$100 billion in annual finance to developing countries from various sources by 2020. The EU funds the Global Climate Change Alliance (GCCA) and has now launched a new phase (GCCA+), with an expected commitment of around €350 million for 2014-2020. This will support least developed countries (LDCs) and small islands developing states (SIDS) in adapting to the impacts of climate change and integrating resilience in their overall policies.

US$23 million to provide a major scale-up of UNFCCC Climate Technology Centre & Network

Canada, Denmark, the European Union, Germany, Italy, Japan, Korea, Switzerland and the United States will provide $23 million for a major scaling up of the United Nations Framework Convention on Climate Change (UNFCCC) Climate Technology Centre & Network (CTCN). This was announced at COP22 in Marrakech. The CTCN delivers tailored capacity building and technical assistance for climate mitigation and adaptation technologies and policies at the request of developing countries. It is hosted and managed by UN Environment in collaboration with the United Nations Industrial Development Organization (UNIDO), and is supported by 11 partner institutions around the world. The Centre also harnesses expertise from a global network of over 200 civil society, finance, private sector and research institutions. Some examples of support: providing capacity building for national energy efficiency policies in Colombia, technical assistance for design and financing of crop drying and storage technologies for enhanced food security in Mali, and facilitation of south-south technology transfer in Bhutan to reduce greenhouse gas emissions in the transport sector.

Measuring the SDGs: more clarification for indicators on energy and environment needed

As the first year of implementation of the 2030 Agenda for Sustainable Development concludes, the technical work of the UN continues as it seeks to refine and agree on global indicators to measure progress. Currently, a large number of indicators (some 88) remain in “Tier III”, which means they require further conceptual clarification – and this is especially true with regard to environmental issues. Civil society organisations estimate that 60% of the environmentally relevant indicators of the SDGs are currently in Tier III. This and other points to refine the indicator framework – including proposals made during a recent stakeholder consultation on refining the indicators – were discussed at the 4th Interagency and Expert Group on SDGs (IAEG-SDGs) meeting, held on 15-18 November in Geneva.

On target 7.1, to enhance international cooperation to facilitate access to clean energy research and technology and mobilise US$100 billion investment by 2020 – related to SDG7 – refining proposals were made such as to measure the amount of public and private funds invested in clean energy infrastructure and clean energy technology, as well as international cooperative agreements to that end. Finland’s Ministry of Foreign Affairs even went further, stating that “the term ‘advanced and cleaner fossil-fuel’ is ambiguous and opens the door to any business-as-usual fossil investments to be included [as] every new coal power plant is arguably ‘cleaner’ than older plants”. Therefore, sustainable and clean energy should be defined strictly as renewables only.

The IAEG-SDGs will submit a report to the UN Statistical Commission in early December 2016, ahead of the 48th UNSC session, scheduled to take place in March 2017. The Group’s next meeting is scheduled for March 2017.

For more information on the IAEG-SDGs framework proposals and an assessment by Global Policy Watch of the recent stakeholder consultation, see here.

€74 million for sustainable development in Latin America and the Caribbean

The EU will fund new programmes with more than €74 million to support sustainable development in Latin America (€30 million) and the Caribbean. This was announced during the EU-CELAC ministerial meeting held in Santo Domingo on 25-26 October 2016. Overall, the EU committed over €710 million in 2016, in key sectors such as climate change, trade, private sector and investment, security and governance. Out of the various programmes signed in Santo Domingo, €9.2 million have been allocated for the technical assistance programme for sustainable energy in the Caribbean (TAPSEC). For Dominica, a new €10 million programme will assist the country's rehabilitation efforts following tropical storm Erika in August 2015. The main objective of the programme is re-establishing the provision of basic services to the public, such as providing clean water infrastructure and sustainable energy. For Latin America, new programmes amounting to €30 million were announced, including security, police and justice programmes but also cooperation initiatives in fields such as agriculture and private sector development.

Developing countries: reducing greenhouse gases by half a gigatonne in 2020 is possible

Renewable energy and energy efficiency projects implemented in developing countries from 2005 to 2015 will reduce annual greenhouse gas emissions by almost half a gigatonne by 2020, according to the second report by the 1 Gigaton Coalition. These reductions could more than double, reaching one gigatonne, if developed nations deliver on commitments made in Paris last year to provide $100 billion in annual climate financing for developing nations by 2020, the report says. The 1 Gigaton Coalition was officially launched in December 2014 by the UN Environment Programme (UNEP) with support from Norway. The ‘1 Gigaton Coalition’ is so named because it is believed that emissions reductions through renewable energy and energy efficiency efforts could deliver annual savings of 1 gigaton of carbon dioxide equivalent (CO2e) per year by 2020.

The World in 2050 (TWI2050): Making sustainable development understandable

The World in 2050 (TWI2050) is a new, global scientific initiative, designed to provide a clear understanding of the full consequences, benefits but also costs of inaction with regard to the 2030 Agenda and the SDGs. TWI2050 aims to provide fact-based knowledge to support the policy process and implementation of the 2030 Agenda. It will address the full spectrum of transformational challenges related to achieving the 17 SDGs in an integrated manner. TWI2050 was launched by the International Institute for Applied Systems Analysis (IIASA), the Sustainable Development Solutions Network (SDSN), the Stockholm Resilience Center (SRC) and the Earth Institute at Columbia University.

IRENA: US$50 million available for renewable energy projects in developing countries

The International Renewable Energy Agency (IRENA) and the Abu Dhabi Fund for Development (ADFD) have officially opened the fifth round of funding for renewable energy projects in developing countries. The funding round, of approximately US$50 million, is part of ADFD’s US$350 million commitment offering concessional loans to renewable energy projects endorsed by IRENA. Since 2012, the IRENA/ADFD Project Facility has enabled US$144 million in loans to 15 renewable energy projects in 14 developing countries. Selected projects thus far have included off-grid, mini-grid and on-grid projects using wind, solar, hydro, geothermal and biomass sources. Thanks to the first three cycles, more than 68 megawatts of renewable energy capacity will be brought online, improving the livelihoods of 760,000 people. The deadline for applications for this fifth cycle is 15 February 2017. Results will be announced in January 2018.

Report on blended finance: Understanding its potential for Agenda 2030

With a funding gap in developing countries of US$1.9 trillion to US$3.1 trillion each year, the question of how to finance the ambitious 2023 Agenda remains a high priority. Blended finance, or the use of public funds to de-risk or ‘leverage’ private investments in development, has been presented by donors and development finance institutions (DFIs) as a promising tool. However, the discussion so-far has been based on little evidence. The report “Blended finance: Understanding its potential for Agenda 2030”, issued by Development Initiatives, an independent international development organisation working on the use of data to drive poverty eradication and sustainable development, seeks to change that. The key finding of the authors: Blended finance is growing – but not to a sufficient extent. If the current annual growth rate were continued, private capital mobilised through blended finance would total US$42 billion by 2020 and US$252 billion by 2030 – well short of the gap in SDG funding. The report also examines where and on what blended finance is spent, who the main providers are so-far, and how data on this can be improved.

Members of the OECD Development Assistance Committee (DAC) are increasingly working with the private sector in development cooperation to realise sustainable development outcomes. To learn from this experience, the DAC introduced a peer learning review on working with and through the private sector in development cooperation. The publication “Private Sector Engagement for Sustainable Development” draws on the practical experiences of DAC Members, highlights good practice, provides a typology of private sector engagement and outlines key lessons. It reveals 15 critical lessons for successful engagement, among them ensuring that institutions are fit for purpose, investing in a business-enabling environment and partnership as a key approach.

The European Bank for Reconstruction and Development (EBRD), the Agence Française de Développement (AFD) and the European Investment Bank (EIB) are providing a €35 million financing facility to Banque Centrale Populaire (BCP) in Morocco to further strengthen sustainable energy measures in the country, with the support of the European Union Neighbourhood Investment Facility (EU NIF). The finance line is the fourth under the Morocco Sustainable Energy Financing Facility (MorSEFF), a comprehensive programme for sustainable energy and energy efficiency investments through financial institutions. The facility is dedicated to lend to small and medium-sized enterprises (SMEs) in the commercial and industrial sectors, including construction and energy service companies.

Additionally, Morocco has become the latest member of the International Energy Agency (IEA) and the first country in the Middle East and North Africa to join the IEA’s Association Initiative, aimed at opening its doors to emerging economies.

The European Union, KfW, the EIB and Agence Française de Développement have jointly signed an Umbrella Agreement with the Arab Republic of Egypt to secure financing and pave the way for implementation of a new large-scale windfarm in the Gulf of Suez area in Egypt. The project has at least a 200 megawatt capacity, and represents a cornerstone of Egypt’s long-term energy strategy. The windfarm will generate 650 GWh of electricity per annum, supplying energy to 370,000 Egyptians, and will avoid some 288 000 tons per year of Co2. It also serves the Egyptian Government’s objective of generating at least 20% of energy from renewable sources by 2022. The project budget amounts to 343 million Euros, of which 267 million Euros are planned to be provided by the European Development Partners.

New programme to boost renewable energy markets in Egypt, Jordan, Morocco and Tunisia

The European Bank for Reconstruction and Development (EBRD) and the Union for the Mediterranean (UfM) launched a joint programme to develop private renewable energy markets in Egypt, Jordan, Morocco and Tunisia during the EU Energy Day at the COP22 in Marrakech. This “SEMED Private Renewable Energy Framework” (SPREF) provides €227.5 million to help the region reduce its heavy dependence on imports of hydrocarbons. It aims to mobilise additional investment from other parties – including the Climate Investment Fund’s Clean Technology Fund (CTF) and the Global Environment Facility (GEF) – of up to €834 million. Financing will be accompanied by targeted technical cooperation support for the implementation of renewable energy projects in the region that aim to avoid 780,000 tonnes of CO2 emissions annually.

Costs and returns of renewable energy in Africa: Lessons learned in Ghana and Kenya

A new study, launched by the British Institute of Development Studies (IDS), under the Pro-Poor Electricity Provision Scheme, compares the costs and returns of renewable energies in Ghana and Kenya. It examines which generation technologies are financially viable and which generation technologies are affordable – by calculating the levelised cost of energy (LCOE) and internal rate of return (IRR) for a portfolio of renewable energy technologies under different scenarios. The results are better for Kenya, since wind and geothermal technology in the country offer low-cost electricity and healthy returns on investment. Kenyan feed-in tariffs (FiTs) also protect investors against currency devaluation and the off-taker is creditworthy. Ghana’s renewable electricity (except hydro) is expensive in comparison and offers lower returns. This is mainly due to high financing costs and lower-quality renewable resources. Additionally, investors in Ghana are not protected against further currency devaluation. Policymakers in the country should target these key constraints, the authors of the study say. The role of public finance and public–private partnership is highlighted as a way forward to improve the financial performance of renewable energy in sub-Saharan Africa.

REN21, the Renewable Energy Policy Network for the 21st Century, together with UNIDO and Austrian Development Cooperation has published the first edition of the East African Community (EAC) Renewable Energy and Energy Efficiency Status Report, which presents a comprehensive perspective on the current status of renewable energy in the region. The different chapters provide information on the market and industry, the policy landscape as well as on investment flows. The report also reveals that, over the past decade, the share of people without access to modern energy services has fallen by nearly 10 percent, widely due to renewables. However, these advances are not spread evenly geographically. The report therefore aims to raise awareness about the potential of the African continent to become a leader in renewable energy development and deployment. It also aims to serve as a helpful information tool for the newly established EAC Centre for Renewable Energy and Energy Efficiency (EACREEE).

World Bank Report: Electricity in Africa must be made equally profitable and affordable

Currently, only one in three Africans has access to electricity and for those who do, power outages can be common as cash-strapped utilities struggle to maintain steady, reliable supply due to under-investment in their aging infrastructure. This is the central message of the new World Bank study “Making power affordable for Africa and viable for its utilities”. The publication looked at utility financial statements in 39 African countries, spending data in 22 household surveys and power tariffs in another 39 countries. It suggests several ways of recovering the costs of supply and making electricity more affordable – especially for the poor. “We won’t be able to accelerate progress towards universal access without improving the performance of utilities in Sub-Saharan Africa. Making electricity connection and consumption more affordable while minimizing utilities’ financial losses is therefore a priority,” said Makhtar Diop, the World Bank’s Vice President for Africa.

Austria, France, the European Commission, Australia and Canada have joined the NAP Global Network, which seeks to enhance bilateral donor’s support for the National Adaptation Plan (NAP) processes. Austria also announced to provide US$100,000 funding for NAP Global Network activities, with an additional $2 million CAD coming from Canada. The network was created in 2014 to enhance support for national adaptation planning through peer learning and exchange, improved coordination and supporting national level action on NAP development and implementation. The Network’s participants are based across more than 50 countries and include representatives of bilateral donors, as well as participants from developing countries.

The Danish government has agreed to set aside 11 million kroner to help developing nations implement the use of climate-friendly technology. The foreign minister, Kristian Jensen, speaking at COP22, said that spreading green tech and climate-friendly solutions to developing nations was critical in reaching the goals of the COP21 climate agreement signed in Paris last year.

Finland and the Netherlands have joined Mission Innovation (MI), increasing the total member country count to 23, including the European Union. Mission Innovation (MI) was founded in November 2015 as a global initiative to accelerate the pace of clean energy innovation, achieve performance breakthroughs and cost reductions, and to provide widely affordable and reliable clean energy solutions worldwide. The member governments represent more than 80%of global clean energy investment, and have pledged to double their clean energy research and development funding over five years to around $30 billion (USD) per year by 2021.

Germany will put a strong focus on green growth and renewable energy in its future bilateral cooperation with South Africa. This was announced by German Minister for Economic Cooperation and Development, Gerd Müller, after negotiations with South African partners in November in Berlin. Germany in particular supports South Africa in feeding renewable energies into its overall electricity grid.

The two major agreements of last year, the 2030 Agenda and the Sustainable Development Goals as well as the Paris Agreement on Climate and Energy, are both based on a fundamental human paradox, Professor Jeffrey D. Sachs said at the CEO Forum in Dublin in October. On one hand they mark global agreements “almost unheard of”, while on the other hand “wars and conflicts are raging”. At the event Sachs highlighted that “the agreements show that we have an unlimited capacity to achieve great things on a global level, whereas at the same time we have a bloody-mindedness to make incredible disaster.” Sachs had dedicated his speech to the age of sustainable development and the question how business leaders in Ireland can take action to help implement the goals. Sachs himself was a key architect of the SDGs.

Italy and other countries have joined efforts in the Biofuture Platform, a new collective effort to accelerate development and scale-up deployment of modern sustainable low-carbon alternatives to fossil-based solutions in transport fuels, industrial processes, chemicals, plastics and other sectors. The platform, launched during COP22 in Morocco, follows-up on the commitments established by Rio+20, the SDGs and the Paris Agreement. The initiative’s ultimate goals will be to help in the global fight against climate change and to aid countries in reaching their Nationally Determined Contribution targets (NDCs), as well as to contribute towards the SDGs. Besides Italy, participating countries included Argentina, Brazil, China, Denmark, Egypt, Finland, India, Italy, Morocco, Paraguay, Sweden, the United States of America and Uruguay. International organisations, such as IRENA, UNCTAD, IEA, FAO and SE4ALL also support the Biofuture Platform.

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